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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Apc Technology Group Plc | LSE:APC | London | Ordinary Share | GB0000373984 | ORD 2P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 9.875 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMAPC
RNS Number : 3615Y
APC Technology Group PLC
05 December 2017
5 December 2017
("APC" or the "Company")
Final Results for the Year ended 31 August 2017
APC Technology Group PLC (AIM: APC), the provider of design, specification and distribution services for specialist electronic components and systems, lighting technologies and connectivity products, is pleased to announce its results for the year ended 31 August 2017.
Financial highlights
-- Post-tax result improved to a profit of GBP0.2 million, compared with a loss of GBP12.9 million in 2016 (which was predominantly attributable to exceptional and non-recurring expenses)
-- GBP0.8 million operating profit before exceptional and non-recurring expenses, compared to GBP0.3 million in the prior year
-- Revenue from continuing operations GBP15.6 million (2016: GBP18.0 million)
-- Gross profit, before exceptional and non-recurring expenses GBP5.4 million (2016: GBP6.4 million)
-- Gross margin, before exceptional and non-recurring expenses 34.9% (2016: 35.8%) -- Headcount within continuing business reduced from 91 to 65 -- Underlying operating overheads reduced by 19% compared with 2016
-- Two share subscriptions completed in the period, resulting in GBP0.5 million in new equity for the Group
-- Net debt at year-end reduced to GBP3.1 million (2016 GBP3.2m), of which GBP2.5 million (2016: GBP2.7 million) relates to amount owed under the Group's GBP6 million invoice finance facility with ABN Commercial Finance.
Operational highlights
-- Bookings in year of GBP16m, representing a positive book to bill ratio for future growth:
o APC Hi-Rel order book at year-end GBP2.4m, double last year, and bookings during the year GBP7.1m, up 35% on prior year
o APC Time bookings during year GBP1.2m, up 75% on prior year -- Order highlights in year include: o GBP1.8m of power supplies for the defence sector, o GBP700k repeat order for a civil aviation programme, o GBP250k of counter IED technology, and
o GBP500k revenue to date, with quoted work at over GBP2.5m, under a new preferred supplier agreement for a major facilities management group.
-- APC specialist teams generated increased revenue for their partners: o Group's top 15 suppliers by revenue in 2017 shared average growth of 16% -- Business development highlights:
o APC Lighting re-focused as a bespoke lighting solutions provider to property management companies, with three preferred supplier agreements signed in the period
o UK distribution deals signed with Datel, Crystek, Signal Microwave, MWT and Oregano o Robust pipeline of other opportunities
Tony Lochery, Chairman of APC, commented:
"The financial year ended 31(st) August 2017 has seen the successful conclusion of a period of restructuring, a return to profitability and
the formation of a management team well equipped to lead the company into a period of sustained growth.
In parallel with the restructuring, we have strengthened relationships with top suppliers, who shared significant growth during the period. As a consequence, we have also deepened relationships with end-users, and this in turn reinforces our market position as an essential and value-adding link in a technical and specification driven supply chain.
It is our intention, through sales growth, profit growth, and cash generation to make APC a reliable and rewarding investment and trading partner for many years to come. We are currently trading in line with management's expectation.
We would like to thank our staff, shareholders and suppliers for their continued support, particularly in the last 12 months."
Enquiries
APC Technology Group PLC +44 (0) 330 313 3220
Richard Hodgson, Chief Executive www.apcplc.com
Michael Thompson, Finance Director
Stockdale Securities Limited (Nominated Adviser and Broker) +44 (0)20 7601 6100
Mark Brown / Antonio Bossi / Edward Thomas
STRATEGIC REPORT AND OPERATIONS REVIEW
The Directors are pleased to submit their Statutory Strategic Report for APC Technology Group PLC ("the Company") and its subsidiary undertakings (together "the Group") for the year ended 31 August 2017, together with a review of the Group's operations during the year.
Principal activities
The principal activity of the Group and Company during the year was the design, specification and distribution of specialist electronic components and systems, lighting technologies and connectivity products to the defence, aerospace, industrial, real estate, logistics and healthcare sectors.
Review of the year
Last year we reported that the Board had reviewed the Group's strategy and had determined that we should concentrate on our core strengths, the design, specification and distribution of specialist electronic components and systems. This review had identified a number of activities that did not fit with this strategy and therefore were discontinued during the 2015/6 financial year. In addition the Board reluctantly concluded that the Green Compliance water monitoring business also did not readily align with the strategy and as a result Green Compliance Water Division Limited was sold on 12 October 2016 to Integrated Water Services Limited ("IWS"), a subsidiary of South Staffordshire PLC.
The transaction triggered an exceptional charge to the 2015/6 income statement of GBP7.6 million, representing a non-cash write down of the intangible asset value of customer lists and goodwill relating to the water hygiene business, which was included in discontinued operations. Exceptional charges relating to other aspects of the restructuring meant that the 2015/6 financial year reported a significant loss.
The year ended 31 August 2017 has seen very considerable progress, as the Group has been able to concentrate on developing the new strategy. In addition the year has seen the benefits of the extensive review of overheads carried out last year. As a result we are pleased to be reporting a pre-tax profit of GBP166,000 this year, together with an improvement in our cash flow. More details on our improved financial performance are set out in the Financial Results section of this Report.
The Group has benefitted for all or most of the year under review from a number of major changes made in the last fifteen months:
-- The Group's sites at 47-48 Riverside, Rochester, and Phoenix Park, St Neots, were closed last year and throughout 2017 all Rochester operations have been concentrated at the Group's offices at Stirling Park.
-- A full-time Finance Director was appointed in April; he and a strengthened finance team are now all based in Rochester, which enables a closer relationship with operations and improved working capital management and financial controls.
-- The business model for lighting was overhauled in 2016 and the business is enjoying a wider customer base as a result. The key partnerships established with leading European manufacturers have reduced freight costs and supplier lead times, enabling a reduction in inventory levels.
-- Group headcount has been reduced from 91 at 31 August 2016 to 65 at 31 August 2017.
-- The London office at Borough has been vacated and a smaller serviced office established in central London.
-- Legacy costs relating to headcount reductions in recent years had largely ceased by the year-end.
As a result of the above, underlying operating overheads in 2017 were 19% less than last year.
In addition, the Board has strengthened the financing base of the Company in several ways:
-- The already supportive relationship with ABN has been further enhanced, as their GBP6 million invoice discounting facility continues.
-- The creditor invoice financing facility with Pay4 Limited has been increased from GBP300,000 to GBP400,000 (with a further increase to GBP500,000 since the year-end).
-- Two share placings and share subscriptions raised a total of GBP0.5 million before expenses.
More details on these financing measures are dealt with in the funding and cash flow section of this Report.
As a result of the above developments, during the year under review the Board was able to embark upon a programme of simplifying the corporate structure and reducing the number of now-dormant subsidiaries within the Group. 17 such subsidiaries were dissolved during the financial year and a further 14 since the year-end.
Review of continuing operations
Since the restructuring that took place last year, the Group has been trading as a design, specification and distribution business, comprising individual sales-led teams with specialist areas of expertise that adopt common marketing, sales and post-sale processing standards. This combination maximises the opportunity for technical sales professionals to be incentivised to grow their focus area in an entrepreneurial way, whilst following a consistent framework.
The teams have specialist expertise, allowing them to monitor technological advancements, major projects, legislation and industry needs. APC predominately designs-in and distributes high reliability, highly durable and long lifespan components and systems for critical applications, with customers often paying a premium for this high performance, high specification technology.
The positive progress made by each of these teams in the year under review is discussed below.
High-Reliability Electronics (trading as APC Hi-Rel) provides the technical sale of high-reliability, high temperature and high voltage electronic components into the defence and aerospace markets. APC represents a range of manufacturers for the UK market and works on projects that can run for 3 to 5 years. With these long projects, future bookings are a good measure of success. In the financial year 2017, bookings were GBP7.1m, which is a 34.6% uplift to 2016 total bookings.
Design-win success for aerospace-grade power supply units
Resulting from a series of design win successes, APC Hi-Rel is the sole supplier of units to power flight control systems on several major civil and military aircraft production programmes. APC works with the engineering teams of aerospace equipment manufacturers to incorporate industry-leading products (together with advanced products from other manufacturers) into multiple airborne equipment sets including display, weapons and control systems.
Radio Frequency and Microwave (trading as APC RF & Microwave) distributes high performance connectors, passive and active devices and related electronic components to the defence, telecoms, wireless and broadband markets. 80% of its customer base is within the defence sector and 20% within other markets including aerospace. Addressing the wider market is a growth opportunity for future periods.
Continued involvement in protection of armed forces
In 2017 APC's involvement in advanced counter-improvised explosive device (IED) technology resulted in year-on-year sales growth for APC RF and Microwave. The division has worked with defence customers on this technology since 2008, providing components that generate radio frequency power to block the signals often used to trigger IEDs. As the threat of Remote Controlled IEDs continues to escalate, APC is well placed to provide solutions.
Embedded computing, wireless and Internet of Things (IoT) (trading as APC Smartwave) sells embedded computer boards and memory, gateways, sensors and related components to IT, industrial manufacturing, defence and healthcare sectors. Again, widening the industry penetration of our major technology lines presents a growth opportunuty.
Time and Frequency Synchronisation (trading as APC Time) provides time and frequency synchronisation systems to financial institutions, government bodies, broadcasters, telecoms organisations and rail companies. APC Time has continued to represent one of the top three global manufacturers for nine years, growing the revenue generated for that company within the past year by 53%.
Transaction timing legislation boosts sales within financial sector
New financial legislation, MiFID II, which comes into force in January 2018, has provided a boost in sales for APC Time, providers of time and frequency synchronisation. Under the new requirements, financial institutions and those involved in high frequency trading must comply with stricter limits for the time stamping of transactions. Significant orders have come from the London operation of a major French bank and an American multinational finance company.
Lighting Technologies delivers project-based lighting solutions, from lighting design and specification through to supply and installation. This business has been trading as Minimise Energy but is in the process of re-branding to APC Lighting.
Following a refocus of its business model, APC Lighting predominately operates through preferred supplier agreements with property/facilities management companies that manage property portfolios across all sectors including education, retail, health, hospitality and leisure. In the financial year APC undertook a strategic realignment of our partnership base to generate a better quality of earnings.
Lighting for Facilities Management. APC Lighting has delivered GBP750k of lighting in the last six months to a leading property management company across three of the several thousand facilities that they manage. This has been achieved since signing a new preferred supplier agreement in June 2017. The current quoted pipeline is a further GBP2.5m across what is still a small percentage of the remaining estate.
Performance Management (trading as EEVS) provides energy efficiency verification services to businesses that have signed energy performance contracts with service providers, or to public sector organisations that have funded energy saving measures. This specialist advisory and analysis service begins at contract creation and provides on-going, independent validation for projects in which expenditure or finance is linked to supplier performance.
Major Telecoms Provider. Following the signing of a long-term performance management contract with a major high street bank, EEVS has now also secured a long-term contract with a major telecoms provider for performance management products and analytical capability to support its energy efficiency program. EEVS will supply performance governance and verification products to ensure savings are properly measured and verified.
Financial results
Group revenue from continuing operations for the financial year was GBP15,564,000 (2016: GBP17,961,000). Gross profit (excluding exceptional and non-recurring expenses) was GBP5,431,000 this year(2016: GBP6,438,000), representing a gross margin of 34.9% compared with 35.8% last year. The operating profit, before amortisation and acquisition costs, of GBP271,000 in 2016 improved to GBP756,000 this year, as a result of a significant cost-cutting programme that saw underlying overheads from operations reduce from GBP6,116,000 to GBP4,973,000, a reduction of 19%. In addition, the Group's ownership of 15% of the issued share capital of Open Energy Market Limited ("OEM") was valued to a fair value of GBP307,000, in accordance with fair value hierarchy level 3 under IFRS 13 'Fair Value Measurements', following an upturn in the OEM business. Earnings per share, on operating profit before exceptional costs, amortisation and share based payments improved from 0.3p to 0.4p.
Profit before tax from continuing operations for the year was GBP166,000, compared with a loss of GBP3,086,000 in 2016 (which had been incurred through accounting for one-off exceptional costs totaling GBP3,026,000). The post-tax profit for the year was GBP192,000 compared with a loss of GBP12,875,000 in 2016 (which had included a loss of GBP9,789,000 from operations discontinued in that year).
Funding and cash flow
In the financial year, there was a cash outflow from operating activities of GBP719,000 which was heavily influenced by a reduction of GBP2,084,000 in trade and other payables; improved control over working capital also achieved decreases in trade and other receivables and inventory levels. This was a significant improvement on the outflow of GBP4,245,000 in 2016, most of which had arisen from exceptional costs and discontinued operations. The Group ended the year with a gross cash balance of GBP377,000 (2016: GBP444,000).
The Group's net debt at 31 August 2017 was GBP3,101,000 (2016: GBP3,161,000), The Group has an invoice discounting facility with ABN of up to GBP6,000,000, of which GBP2,502,000 had been drawn down at the year-end (2016: GBP2,711,000). ABN have demonstrated considerable support for the business since the facility was established in early 2015 and the facility continues with no fixed termination date. In addition, the Group had a trade payment credit facility with Pay4 Limited of GBP400,000 which was fully utilised at 31 August 2017. Since the year-end the facility has been increased to GBP500,000.
During the year, the Board authorised two share subscriptions by existing investors and Board members, which raised a total of GBP479,000. These measures further strengthened the balance sheet, while providing adequate working capital for the Group as it emerges from its period of restructuring.
On the basis of current financial projections and available funds and facilities, the Directors are satisfied that the Group and parent company have adequate resources to continue in operation for the foreseeable future. The Directors therefore continue to adopt the going concern basis of accounting when preparing the financial statements, as described more fully in the Directors' Report and the note on accounting policies in the financial statements.
Board of Directors and senior management
The Board started the financial year with two Executive and two Non-executive Directors, assisted by the interim Chief Financial Officer.
As reported last year, the Senior Independent Director Ian Davidson and the Chairman Leonard Seelig were both due to retire by rotation at the Annual General Meeting in February 2017 and decided not to seek re-election. Ian Davidson stepped down from the Board on 13 December 2016 and Leonard Seelig at the conclusion of the Annual General Meeting on 24 February 2017. We are most grateful to both Leonard and Ian for their significant contributions during a period of considerable change in the Group's structure and strategy.
Tony Lochery was appointed to the Board on 24 February 2017 and was elected Chairman following the conclusion of the Annual General Meeting on that date. Tony Lochery has been chairing business to business service and distribution companies for the last 12 years and has an excellent record of value growth and realisation. He brings significant experience in strategy development and operational execution, for businesses trading in the UK and internationally. Tony has held Board positions for over 30 years including 13 positions as Chairman and other executive roles. Prior to becoming non-executive, Tony built his own company, which was sold to Kwik Fit PLC, where he became Group Managing Director. After the sale of Kwik Fit PLC to Ford, Tony became Chief Executive of City Holdings, a privately owned facilities management company employing 10,000 people.
A further change occurred in April with the appointment of Michael Thompson as Finance Director, in place of Art Russell who stepped down as Chief Financial Officer. Art had played a significant role, on an interim basis, in helping to steer the Group through the financial effects of the Operational Review and subsequent restructuring. The Board is very grateful to him for his efforts, but considered that the time had now come for a full-time Finance Director to join the Board, based in Rochester where the majority of the Group's operations, including a strengthened finance team, are now concentrated.
Michael Thompson qualified as a Chartered Accountant in 2007 following three years at a London practice. He then spent several years working for Vantis plc and FRP Advisory LLP, specialising in audit and business recovery. For the past 6 years Michael has worked in the fresh produce sector, formerly as a senior finance manager for Bakkavor, and since 2014 as Finance Director for Newmafruit Farms Limited, a premier fruit farming and packing business with a turnover of GBP25M.
Market growth factors
From a market perspective, there are a number of macro factors that are going to affect APC in the next three years.
Defence Expenditure: According to HM Treasury data and forecasts, capital and resource departmental expenditure limits (DELs) are anticipated to grow by a total of GBP4.6 billion between 2016/17 to a total of GBP39.7 billion in 2020/21. In addition to increased total spend, the UK government has committed to raise the percentage spend that goes to small and medium sized enterprises to 25% by 2020. This could be beneficial to APC, which currently receives 40% of its components revenue from customers operating within military, space, aerospace and defence, not only into the Hi-Rel business but also the RF and Microwave, Smartwave and Time businesses.
US trade: At the present time, the UK exports more to the US than it imports. With HM Revenue and Customs reporting a 1.8% month on month rise in US imports to GBP3.6bn in May 2017, part of a post-Brexit arrangement may well be a significant increase in US to UK trade, with a Trump administration likely to demand parity. This will be beneficial for APC, for whom 72% of component sales come from US manufacturers.
Brexit: The effect of Brexit, and in particular the impact on trade with Europe, remains unknown. However a distributor such as APC, with an established network of end-users in industrial markets, should be able to capitalise on the uncertainty facing manufacturers seeking to penetrate the UK market, not least by helping them navigate the changing clearances and accreditations required to sell and export their products to the UK.
Europe: APC end users are involved in significant collaborations across Europe. The financial performance of the Eurozone, the trade outcome of Brexit, and European elections will all affect APC. We view the uncertainty this brings, for those seeking to sell to the UK, as a major opportunity for APC.
Component shortage: The electronics supply chain has not faced a severe shortage for more than a decade. This has now changed, with leading component suppliers quoting lead times into the first quarter of 2018, and there is a growing emphasis on the importance of cultivating strong relationships with suppliers or distributors.
Outlook
Over the last 18 months, the business has undertaken a significant refocus and restructuring. This has resulted in the first profit since 2014. The Board are pleased that despite this restructuring the order book in the Group's core business has remained strong. The Group has a real focus and structure built around its six product groupings.
The Group will pursue three main growth strategies: growth through increased bookings and billings from its existing and high growth technologies; growth through the signing of new complementary product lines; and growth through targeted bolt-on acquisitions. We are already seeing traction in all of these areas. We are currently trading in line with management's expectation.
The Board consider that, given the progress it is seeing, the business now has a strong platform for profitable growth and a clear vision for the future.
The Board would once again like to take this opportunity to thank our management, staff and advisers for their hard work, dedication, professionalism and commitment to the Group, and to express our appreciation to our suppliers, partners and shareholders for their continued support.
Tony Lochery Richard Hodgson Michael Thompson
Non-executive Chairman Chief Executive Finance Director
4 December 2017
CONSOLIDATED STATEMENT OF INCOME
For the year ended 31 August 2017
Hot Features
Premium
2017 2016
--------------------------------------- ----------------------------------------
Exceptional Exceptional
Results and Results and
from non-recurring from non-recurring
operations expenses Total operations expenses Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 2 15,564 - 15,564 17,961 - 17,961
Cost of sales (10,133) (24) (10,157) (11,523) (736) (12,259)
Gross profit 5,431 (24) 5,407 6,438 (736) 5,702
Administrative
expenses (4,637) (228) (4,865) (6,116) (2,290) (8,406)
Operating
profit
/ (loss)
before
amortisation,
share based
payments and
acquisition
costs 794 (252) 542 322 (3,026) (2,704)
Share based
payments (38) - (38) (51) - (51)
---------------- ----- ------------ -------------- --------- ------------ --------------- ---------
Operating
profit
/ (loss) 756 (252) 504 271 (3,026) (2,755)
Financing
income 4 - - - 1 - 1
Financing costs 4 (338) - (338) (332) - (332)
Profit / (loss)
before
taxation 418 (252) 166 (60) (3,026) (3,086)
Taxation credit 26 - 26 - - -
Profit / (loss)
for the year
from
continuing
operations 444 (252) 192 (60) (3,026) (3,086)
Discontinued
operations
Loss for the
year from
discontinued
operations,
net of tax - - - - (9,789) (9,789)
Profit / (loss)
for the year
attributable
to the equity
holders of
the parent 444 (252) 192 (60) (12,815) (12,875)
------------ -------------- --------- ------------ --------------- ---------
Earnings per share from continuing and discontinued operations attributable to the equity holders of the parent during the year.
Note 2017 2016
Basic earnings
per share 5
From continuing
operations 0.1p (3.0p)
From discontinued
operations - (9.4p)
----- --------
From profit for
the year 0.1p (12.4p)
----- --------
There were no other items of comprehensive income. Accordingly, no consolidated statement of comprehensive income has been prepared.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 August 2017
2017 2016
GBP000 GBP000
----------------------------- --------- -------------
Non-current assets
Intangible assets 7,378 7,378
Property, plant
and equipment 55 132
Associates and
financial assets 307 -
--------- -------------
7,740 7,510
--------- -------------
Current assets
Inventories 832 1,080
Trade and other
receivables 2,985 3,751
Cash and cash equivalents 377 444
--------- -------------
4,194 5,275
Assets held for
sale - 3,036
--------- -------------
4,194 8,311
--------- -------------
Total assets 11,934 15,821
--------- -------------
Current liabilities
Trade and other
payables (4,332) (6,416)
Borrowings (3,478) (3,027)
--------- -------------
(7,810) (9,443)
Liabilities directly
associated with
the assets held
for sale - (2,395)
--------- -------------
(7,810) (11,838)
--------- -------------
Total assets less
current liabilities 4,124 3,983
Non-current liabilities
Financial liabilities - (578)
--------- -------------
Net assets 4,124 3,405
--------- -------------
Equity attributable
to the equity holders
of the parent
Called-up share
capital 2,698 2,556
Share premium account 13,232 12,895
Share option reserve 297 548
Merger reserve 4,635 4,635
Translation reserve - (10)
Retained earnings (16,738) (17,219)
Total equity 4,124 3,405
--------- -------------
Consolidated statement of Changes in Equity
For the year ended 31 August 2017
Attributable to the equity holders Non-controlling
of the parent interests
----------------------------------------------------------------------------------- ----------------
Share
Share option
Share premium valuation Merger Translation Retained Retained
capital account reserve reserve reserve earnings Total earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
At 31 August
2015 1,831 11,302 497 4,635 (10) (4,344) 13,911 (220) 13,691
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Loss for
the year - - - - - (12,875) (12,875) - (12,875)
Other -
comprehensive
income - - - - - - - -
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Total
comprehensive
income for
the year - - - - - (12,875) (12,875) - (12,875)
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Transactions
with equity
holders of
the parent
Issue of
new shares 725 1,756 - - - - 2,481 - 2,481
Disposal
of
non-controlling
interest - - - - - - - 220 220
Costs associated
with share
issue - (163) - - - - (163) - (163)
Share option
charge - - 51 - - - 51 - 51
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
725 1,593 51 - - - 2,369 220 2,589
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
At 31 August
2016 2,556 12,895 548 4,635 (10) (17,219) 3,405 - 3,405
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Profit for
the year - - - - - 192 192 - 192
Other -
comprehensive
income - - - - - - - -
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Total
comprehensive
income for
the year - - - - - 192 192 - 192
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Attributable to the equity holders Non-controlling
of the parent interests
----------------------------------------------------------------------------------- ----------------
Share
Share option
Share premium valuation Merger Translation Retained Retained
capital account reserve reserve reserve earnings Total earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Transactions
with equity
holders of
the parent
Issue of
new shares 142 337 - - - - 479 - 479
Share option
charge - - (251) - - 289 38 - 38
Non-controlling
interest
disposed - - 10 - 10 - 10
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
142 337 (251) - 10 289 527 - 527
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
At 31 August
2017 2,698 13,232 297 4,635 - (16,738) 4,124 - 4,124
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
ConSolidated statement OF CASH FLOWS
For the year ended 31 August 2017
Group Group
2017 2016
GBP000 GBP000
--------------------------- -------- ---------
Reconciliation of cash
flows from operating
activities
Profit/(loss) before
taxation including
discontinued operations
for the financial
year 166 (12,875)
Impairment loss
on assets held
for sale - 6,704
Loss on write-off
of investment in
associates - 788
Gain/(loss) on
revaluation of
investment in associate (307) 307
Loss on discontinued
subsidiary interests - 1,120
Finance costs 338 401
Finance income - (1)
Taxation receipts 26 29
Depreciation of
property, plant
and equipment 90 95
Decrease in inventories 248 846
Decrease / (increase)
in trade and other
receivables 766 (1,025)
Decrease in trade
and other payables (2,084) (685)
Share-based payments
charge 38 51
-------- ---------
Net cash used in
operating activities (719) (4,245)
-------- ---------
Cash flows from
investing activities
Acquisition of
property, plant
and equipment (13) (23)
Sale of subsidiary
undertakings 641 -
Sale of investment
in associates - 319
-------- ---------
Net cash from investing
activities 628 296
-------- ---------
Cash flows from
financing activities
Finance income - 1
Finance costs (338) (401)
Proceeds of share
issue 479 2,318
Finance leases (21) (22)
(Decrease) / Increase
in short-term borrowings (96) 1,340
Repayment of loan
notes - (60)
-------- ---------
Net cash from financing
activities 24 3,176
-------- ---------
Decrease in net
cash (67) (773)
-------- ---------
Cash and cash equivalents
as at 1 September 444 1,239
Decrease in net
cash (67) (773)
Cash in assets
held for sale - (22)
-------- ---------
Cash and cash equivalents
as at 31 August 377 444
-------- ---------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
Statement of compliance
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets at fair value, as required by IAS 39 'Financial Instruments: Recognition and Measurement'. These financial statements have been prepared in accordance with IFRS as adopted by the European Union, and with those parts of the Companies Acts applicable to companies reporting under IFRS.
Going concern basis of accounting
The financial statements have been prepared on a going concern basis, as management believes the Group will be able to meet its liabilities as they fall due.
In the financial year, there was a cash outflow from operating activities of GBP719,000 which was heavily influenced by a reduction of GBP2,084,000 in trade and other payables, while improved control over working capital also achieved decreases in trade and other receivables and inventory levels.
The cash requirement of the Group was funded partly by trading, partly by improved working capital management and partly by two share subscriptions by existing shareholders and Board members, which raised a total of GBP480,000, and GBP641,000 proceeds from the sale of the water business. These measures enabled a reduction of GBP96,000 in short term borrowings and a significant reduction of over GBP2 million in amounts due to suppliers and other creditors.
Management has examined going concern against a detailed profit, working capital, and cash flow forecast to December 2018, which reflects the matters discussed in the preceding paragraph but does not reflect any additional share placings, new debt facilities, nor sale of any assets other than in the normal course of business. Based upon this review, the continuation of the GBP6,000,000 invoice discounting facility with ABN, which has no fixed termination date, agreement of extended payment terms with suppliers as necessary, and other prudent working capital management, the Board believes that the Group will continue to be able to meet its liabilities as they fall due. Management also has the ability to raise capital through issuance of additional loan notes, further private share placings, or sale of additional assets if required.
2. Revenue and segmental information
Operating segments
IFRS 8 'Operating Segments', requires consideration of the chief operating decision maker ('CODM') within the Group. In line with the Group's internal reporting framework and management structure, the key strategic and operating decisions are made by the CEO, who reviews internal monthly management reports, budget and forecast information as part of this process.
Accordingly, the CEO is deemed to be the CODM.
As a result of the sale of Green Compliance Water Division Limited in the previous year, the Company determined that it now has only a single reportable segment, being the design, specification and distribution of specialist electronic components and systems.
The Group had no customers representing over 10% of revenue (2016: GBP2,168,000).
Revenue by product and service
2017 2016
GBP000 GBP000
----------------------- ------- -------
Electronic Components 11,214 10,894
LED Lighting 3,504 6,114
Consulting 846 953
------- -------
15,564 17,961
------- -------
Revenue by geographic location
2017 2016
GBP000 GBP000
----------------- ------- -------
UK 15,216 16,996
North America 82 235
Europe and Asia 266 730
------- -------
15,564 17,961
------- -------
3. Exceptional and non-recurring expenses
2017 2016
GBP000 GBP000
------------------------------------------- ------- -------
Corporate re-organisation - compromise
agreements and redundancy costs 399 1,543
Corporate re-organisation - professional
fees 68 200
Corporate re-organisation - dilapidations
and onerous lease provisions 57 254
Corporate re-organisation - third
party creditors (335) -
Costs associated with aborted contract 24 736
Foreign exchange loss arising from
unprecedented market volatility 39 293
------- -------
252 3,026
------- -------
Exceptional items are items that, by virtue of their nature and incidence, have been disclosed separately in order to draw them to the attention of the reader of the financial information. These costs are deemed as exceptional as they do not represent normal trading activities of the business.
4. Net financing
2017 2016
GBP000 GBP000
------------------ -------- -------
Financing income
Other Interest
receivable - 1
--- -------
Financing costs
Other interest
payable 174 158
Other finance costs 164 174
---- ----
338 332
---- ----
5. Earnings per share
The calculation of basic earnings per share is based on the profit after taxation attributable to equity holders of the parent company for the period and the weighted average number of shares in issue during the period.
Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding by the dilutive effect of Ordinary Shares that the Company may potentially issue relating to its share option scheme.
Earnings per share on operating profit, before exceptional costs, share based payments and loss on discontinued operations, are considered to be the most realistic measure of earnings and the calculation is based on the weighted average number of shares.
The result for the year and the weighted average number of shares used in the calculations are set out below:
2017 2016
GBP000 GBP000
------------------------------------- -------- ---------
Continuing earnings / (loss)
attributable to equity holders
of the parent 192 (3,086)
-------- ---------
Discontinuing earnings /
(loss) attributable to equity
holders of the parent - (9,789)
-------- ---------
From profit / (loss) for
the year 192 (12,875)
-------- ---------
Earnings: operating profit
/ (loss) before exceptional
and non-recurring expenses,
share based payments, amortisation
and loss on discontinued
operations 794 322
-------- ---------
Weighted average number
of shares (thousands) 130,326 103,678
Dilutive / free
shares 917 28
-------- ---------
Diluted number
of shares 131,243 103,706
-------- ---------
6. Publication of non-statutory accounts
The financial information set out in this announcement does not constitute the statutory financial statements for the year ended 31 August 2017 and the year ended 31 August 2016 in accordance with section 434 of the Companies Act 2006 but is derived from those accounts.
The financial statements for the year ended 31 August 2016 were prepared in accordance with EU adopted IFRS and have been delivered to the Registrar of Companies. The financial statements for the year ended 31 August 2017 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditor's report on both accounts was unqualified, did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain statements under sections 498(2) or (3) of the Companies Act 2006.
The full audited financial statements of APC Technology Group PLC for the year ended 31 August 2017 are expected to be posted on Thursday 18 January 2018 to those shareholders who have elected to receive hard copies. It will also be available to the public at the Company's registered office, 6 Stirling Park, Laker Road, Rochester, Kent, ME1 3QR and available to view on the Company's website at www.apcplc.com from the date of posting.
7. Annual General Meeting
The Annual General Meeting of the Company will be held on Thursday 22 February 2018 at 11.00 a.m. at the offices of the Company's auditors, RSM UK Audit LLP, 25 Farringdon Street, London EC4A 4AB.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
December 05, 2017 02:00 ET (07:00 GMT)
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